You can have your weed or you can have your discharge — But you can’t have both.

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Medical marijuana caregivers may face a tough choice – your pot or your house

The Bankruptcy Court for the Western District of Michigan issued a decision today that may leave Michigan Medical Marijuana caregivers in a tough position – having to choose between obtaining relief under the bankruptcy code, or continuing to grow and distribute marijuana in compliance with state law.

In a recently-filed Chapter 13 case, the debtor operated a business growing and distributing medical marijuana from his home in Michigan.  Unfortunately, his honesty about his activities drew some attention from the Department of Justice, which filed a motion to dismiss his case.  The bankruptcy judge found that, because his business is illegal under federal law, he could not continue both his bankruptcy and his business.

The debtor even offered to keep his business earnings separate from the bankruptcy, and use only his social security benefits to make payments under his repayment plan.  But the court was of the opinion that allowing the debtor to continue his business would make the Court a party to violations of federal criminal law.  Ultimately, the court put a hard choice before the debtor: forego bankruptcy relief and continue to operate his medical marijuana business, or immediately cease operations and destroy all of his plants, inventory, and equipment.

People usually don’t consider filing bankruptcy unless they are caught between a rock and a hard place.  Today, the Court has made the decision to file especially difficult for medical marijuana growers.  Filing bankruptcy requires total honesty with the Court, but telling the truth might get you in legal trouble far beyond the financial difficulties already faced by many Michigan residents.

 

Whether you are registered under the Michigan Medical Marihuana Act or not, if you are considering filing bankruptcy it is vital that you are honest with your bankruptcy attorney about everything.  The debtor in today’s decision was only afforded the opportunity to continue with his bankruptcy because he had been completely honest with his attorney, the Trustee, and the Court, regarding his activities.

The Court ordered that if the Debtor chose to continue to pursue a bankruptcy discharge, he must stop growing marijuana and must destroy the plants he currently has. However the Court did not specify how it must be destroyed, perhaps he could just burn it all…a little bit at a time…

If you’re a medical marijuana user who needs bankruptcy relief, wipe the cheetos dust off your fingers, take a shower, and then come see us to explore your options.